Kennedy: Health Care Loses a Champion

As Obama's health-care proposals founder in partisan rancor, Ted Kennedy's ability to work across the aisle is already being missed

Wednesday, Aug. 26, was a day of mourning across Washington as policymakers and politicians absorbed the news that Senator Edward Kennedy (D-Mass.) had died after a struggle with brain cancer. The eulogies for the "Lion of the Senate" rolled in from across the political spectrum; despite his own staunchly liberal leanings, Kennedy was known for his legislative savvy and the ability to reach across the aisle to win bipartisan backing on a wide range of issues throughout much of his 46-year career.

But even as many mourned Kennedy's passing, attention inevitably turned to a critical question: How will his death affect the prognosis for health-care reform—an issue he had long championed—or other critical policies on the Democratic agenda?

"Senator Kennedy had a tremendous impact on the most important legislative battles in Washington and the current health-care reform debate is no exception," says Israel Klein, a former top aide to Senator Chuck Schumer (D-N.Y.) who is now a principal with the Podesta Group lobbying firm. "Not only will he be sorely missed in the health-care, immigration, and education debates ongoing, but his passing will have a political and policy domino effect on all kinds of legislation" including regulatory reform in financial services.

Losing a Crucial Vote

Most immediately, Kennedy's death means that, for the time being, the Democrats no longer have a crucial 60th vote in the Senate needed to pass health-care legislation, or anything else, without a filibuster. But many believe that Kennedy's virtual disappearance from the Senate in recent months has already played a big role in diminishing the prospects for President Barack Obama's health-care proposals and the bipartisan nature of the debate. While no one can say what might have happened had Kennedy been around, there is little doubt the debate has sorely lacked his presence as a champion of reform. "He had been an absolutely tireless, imposing figure in the efforts to get health care passed over the years," says Linda Blumberg, a health-care analyst with the Urban Institute.

That lack has been most visible in the bill written by the Senate Health, Education, Labor & Pensions (HELP) Committee, which Kennedy had chaired. As Kennedy remained home in Massachusetts battling illness, many believe the bill that emerged from the committee paid far less attention to the concerns of Republicans or fiscally conservative Democrats than otherwise might have been the case. The result was a far less bipartisan bill than might have emerged had Kennedy been able to play a stronger role.

When Congress returns in the fall, many fear that similar issues will continue to dog efforts to build the broad, bipartisan support that will likely be needed for a reform bill to pass. Much of Kennedy's influence stemmed from his personal relationships with other senators, which gave him a rare ability to persuade others to put partisan differences aside in the search for solutions. He also had greater public stature and a stronger ability to command media attention than most other senators.

Possibility for Compromise

With the rancor over the reform proposals growing, those abilities will be even more sorely missed as the Democrats try to regain the momentum on health care. "Not only do you lose the personal relationships and the legislative ability that Kennedy had, you also lose a big megaphone," says one Democratic adviser who has followed the debate closely. "He would have been the champion that that kind of massive legislation needs to build support."

Others, however, see the possibility that Kennedy's passing could help build broader support for the compromises needed from both sides to develop the support for reforms. "In the aftermath of his passing, there may well be a more focused and thoughtful dialogue on the issue," says Chris Jennings, a longtime health-care aide to President Bill Clinton who helped author a bipartisan reform package backed by former Senators Howard Baker, Bob Dole, and Tom Daschle. Jennings argues that the recognition that Kennedy was right in his long-held belief in the need for broad health-care reforms, combined with a strong sense of the Kennedy legacy, could allow his death to bring newfound momentum to the debate.

"Both sides will step back and say, 'What's really important here?' " Jennings says. "I suspect in Congress there will be a cadre of serious legislators who will want to build on the Kennedy legacy of getting things done."

Impact on Financial Services

And what of other issues? Labor unions, whose packed agenda for the Administration is topped by the desire to win passage of stalled legislation aimed at making it easier to unionize, have lost one of their staunchest backers in the capital.

Kennedy was also a co-sponsor, along with Senator John McCain (R-Ariz.), of the last significant bipartisan effort to accomplish comprehensive immigration reform. Those efforts collapsed a little over two years ago amid significant disagreements, but President Obama has promised to tackle the issue again. With the congressional agenda already overcrowded and discussions just beginning to get under way, that's unlikely to happen until next year at the earliest. But given the enormous differences that remain on how to deal with such sensitive issues as treatment of the millions of immigrants who are illegally in the U.S., Kennedy's absence could make bridging those gaps even more difficult, as well.

Kennedy's passing could also have major implications for the financial-services industry and the prospects for regulatory reform. Brian Gardner, a Washington policy analyst for institutional broker Keefe Bruyette & Woods (KBW), points out that Kennedy was one of the prime backers in the Senate of efforts to strip government subsidies for private firms that provide student loans; instead, he favored shifting the funding to direct loan programs run by Uncle Sam. Those efforts could lag without Kennedy at the helm of the Health and Education committee. "It is not clear that his successor at the HELP Committee will be as successful as Kennedy has been in reducing (the private lending program)," Gardner said in a note to clients on Wednesday morning.

Tim Johnson Next in Line

Moreover, the need to fill Kennedy's slot at the head of the committee could set off a chain reaction among other committee jobs, the most important of which would be the Senate Banking Committee. Currently, Senator Chris Dodd (D-Conn.) heads that committee, which will play a critical role in the upcoming battles over financial regulatory reforms. But Dodd has been running Health and Education for Kennedy in recent months; if he opts to take on that chairmanship permanently, he would have to give up his role on the Banking Committee.

He could be replaced by one of several contenders. Gardner points out in his client note that Senator Tim Johnson of South Dakota, one of the most conservative Democrats in the Senate, is next in line. He is much closer to the banking industry than Dodd has been, Gardner argues; were Johnson to get the nod, he would likely be much less supportive of proposals for a new consumer protection agency than Dodd would be. He has also generally been less critical of the credit-card industry, which has a major presence in Johnson's home state.

That assumes, of course, that Johnson would get the job should Dodd decide to switch hats. Others, however, believe Rhode Island's Jack Reed or New York's Schumer could make a bid for the job. With a decision unlikely until sometime in September, the uncertainty over the impact of Kennedy's death on the Democrats' fall agenda will continue for a while.